World Week Ahead: US tech earnings in focus

World Week Ahead US tech earnings in focus

Jan 21 (BusinessDesk) – US corporate
earnings will take centre stage with Apple, Microsoft, IBM
and Google among those scheduled to release in the coming
days.

So far, about 72 percent of the 67 S&P 500
companies which have reported quarterly results beat
analysts' forecasts, according to Bloomberg News.

Results
from General Electric and Morgan Stanley were among those
that pleased investors on Friday, while shares of Intel
copped a beating, reporting sagging sales after the market
closed on Thursday.

After a weak start, Wall Street
found momentum in the second half of last week that lifted
it to five-year highs as the latest signs on earnings and
the US economy proved positive, or at least better than
expected, while House Republicans said they will agree to a
temporary lift in the nation's debt ceiling.

The vote on
a three-month extension to the US$16.4 trillion borrowing
limit—set to be surpassed sometime from mid-February to
early March¸ according to the Treasury Department—will
take place on Wednesday.

The debt-ceiling vote is part of
a rethink by House Republicans to get Senate Democrats
onside with a budget that details spending cuts.

“We are
going to pursue strategies that will obligate the Senate to
finally join the House in confronting the government’s
spending problem,” Speaker John Boehner said in a
statement late last week.

In the past week, the Dow Jones
Industrial Average gained 1.2 percent, the Standard & Poor's
500 Index rose 0.9 percent, while the Nasdaq Composite Index
advanced 0.3 percent. Both Dow and S&P 500 finished the week
at their highest level in five years.

And equities seem to
be extending their appeal when compared against fixed-income
securities.

"From a yield perspective, a lot of stocks
still yield a great deal of money and so it is very easy to
see why money is pouring into the stock market," Stephen
Massocca, managing director at Wedbush Morgan in San
Francisco, told Reuters. "You are just not going to see
people put a lot of money to work in a 10-year Treasury that
yields 1.8 percent."

On Monday, US markets are closed for
the Martin Luther King Jr holiday. In Washington on Sunday,
President Obama will take the oath of office to mark the
official start of his second four-year term.

On the
economic front, the coming days will see reports on the
housing market—existing home sales on Tuesday, the FHFA
house price index on Wednesday and new homes sales on
Friday.

Other data include the Chicago Fed national
activity index and the Richmond Fed manufacturing index,
both due Tuesday, as well as the PMI manufacturing index
flash and leading indicators, both due Thursday.

In
Europe, the Stoxx 600 Index edged less than 0.1 percent
lower last week. The World Bank predicted another
contraction for the euro-zone economy this year, while
Germany downgraded its expectations for growth of Europe's
largest economy in 2013.

Euro zone finance ministers are
set to gather for their first meeting of 2013 on Monday with
Dutch finance minister Jeroen Dijsselbloem poised to become
president of the Eurogroup.

Policy makers at the Bank of
Japan are meeting this week and are expected to announce
further measures to halt deflation which may include
open-ended asset purchases. In anticipation, the yen last
week slid further against both the euro and the greenback.

"Expectations are nearly universal for a shift from a 1
percent to a 2 percent inflation target, including upsized
[asset buying] measures," Dan Dorrow, head of research at FX
broker Faros Trading in Stamford, Connecticut, told Reuters.
"Prime Minister [Shinzo] Abe and the political class as a
whole have a very compelling need to push BoJ into a regime
change and keep it there. The political pressure on the BoJ
will not
abate."

The Wellington-based BusinessDesk team led by former Bloomberg Asian top editor Jonathan Underhill and Qantas Award-winning journalist and commentator Pattrick Smellie provides a daily news feed for a serious business audience.

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